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Portfolio Strategy

Focus on the “Big Picture” Amid all the Uncertainty....

Our view: Too Fast, Too Furious accurately depicts the current backdrop with soaring inflation, rapid increases in interest rates/yields, whip-saw markets, and a material deceleration in the global economic growth outlook. To say that the environment has changed quickly since the beginning of the year would be an understatement, rather it’s been Too Fast, Too Furious. But it is now clear that central banks in advanced economies will raise interest rates even further than our prior above-consensus forecasts, making the current tightening cycle the most aggressive we have observed in three decades. While this may be necessary to tame inflation, it will come at a significant economic cost. In particular, we expect a global recession to unfold in 2023, which will be more severe in some regions and milder in others. Thus we continue to expect the level of uncertainty to remain very elevated, with “fewer and fewer places to hide” amid all the worrisome headlines or “wall of worries” as we like to refer to them as. But for longer-term-oriented, patient, and prudent investors, we continue to see many places to invest today. Despite all the uncertainties on the horizon, below are a few certainties investors should keep in mind:

  • It pays to stay invested - avoid the temptations to time the market; it’s a losing proposition for even the smartest minds (e.g., Long-Term Capital Management).
  • Ignore the headlines/noise and remember to be “fearful when others are greedy, and greedy when others are fearful" - Warren Buffett.
  • Stay rational when markets/investors appear to be behaving irrationally.
  • Ignore your emotional tendencies and stick to your plan; otherwise, you may end up buying-high & selling-low.
  • Volatility/market sell-offs should be expected and are NORMAL even during broader bull market cycles!.
  • Diversification + Asset Allocation = 😀


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